Math 230 Quant Analysis - Assignment Example

Amortization Analysis The house price used in this assignment was retrieved from the realtor.com website via the link http www.realtor.com/realestateandhomes-detail/7089-Miami-Hills-Dr_Sycamore-Twp_OH_45243_M39762-80022 The quoted price of the house was $279,900 from which a deposit of 20% was calculated that is$279900*20%= $55,980Financing option A comprised a down payment of 20% and paying the remaining amount for a period of 5 years-with no additional principal payments additional- at an interest rate of 10% per annum.

Financing option B comprised a down payment of 20% and a paying period of 5 years just as Option A. However; it also involved extra principal payment of $1,000 at the start of each year.Similarities in the amortization schedules of the two financing options Both schedules shows fixed monthly payments except that under option B the monthly payment was $2,757.10. Second, the interest expense and outstanding principal were reducing as the period of payment increased in both schedules.Differences between the schedules Amortization schedule for option A had more moths than that of option B, 60 and 59 respectively meaning option A had a longer payment period than option B.

Second, the amount of extra principal payments in option A was zero all the way from the start to the end whereas in the schedule of option B, a figure of $1,000 appeared at the start of a period of twelve months, after one year. Third, the payment in the last month was different; option A had a higher figure than option B. This associated to the extra principal payments in option B. The better option is option B because it has a shorter time period for paying for the house and lesser interest expense too, a total of $59,803.

09 compared to $61,538.30 of option A.